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Embedded insurance partnerships - worth the effort?

By 2030 embedded P&C insurance is estimated to the value of $700 billion, most established insurance companies are not setup to effectively capitalize on the opportunity that is growing rapidly.

What is your company’s level of embracement of embedded insurance? Most likely it is not high, as it is an overly complex IT process to set up a new partnership. But it is worth prioritizing – according to Simon Torrance, by 2030 embedded P&C insurance is estimated to the value of $700 billion.

The main driver of complexity for most insurance legacy systems is that they were developed without the capabilities of embedding insurance – they were made for batch processing (e.g. exchange of bank files, transactions, etc.), not to interact online instantaneously with web applications, mobile applications and other digital channel’s.

NCDC has been developing core insurance systems globally for over 20 years. Two main options we have successfully been implementing and find beneficial for insurers with legacy systems are:

  Developing a service layer for legacy system

   Migrating to a modern core system.

Developing a service layer allows communication between legacy system and the partners’ solutions. In comparison with migration, it has the following attributes:


 upfront cost can be lower if the level of complexity is low

 implementation can often be faster


 often requires a significant amount of extra code for basic required functionality

 old and unmaintained code can react in strange ways

 slower and costly onboarding of new partners

 higher than average cost of maintenance

Migrating to a modern core system with dedicated APIs enables easier exposition for embedding products with partners solutions.
Compared with developing a service layer, the following attributes apply:


 most of the work has already been done

 extra processes can be added more easily; atomic operations have already been developed

 larger array of possibilities that can provide a competitive advantage to attract new partners

 easier integration with near future ideas

 faster onboarding of new partners

 lower cost of onboarding new partners


 more time and money can be needed for initial modernization

In summary we find that it is most important to choose the technology which best supports long term business objectives. If embedding your insurance products with multiple partners is one of the objectives, we recommend the solution adopted is the one that has the most possibilities of connecting with future technology.

References: https://www.linkedin.com/pulse/embedded-insurance-3-trillion-market-opportunity-could-simon-torrance/  

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